Smart & Final Agrees to Settle Overtime Suit

Warehouse grocer Smart & Final Inc. said Wednesday that it agreed to settle an overtime pay lawsuit filed by California employees and would therefore take a $19-million pretax charge against third-quarter earnings.

Lawyers for the workers said the company would pay $22 million under the settlement.

The class-action suit on behalf of 13,000 current and former hourly employees alleged that the retailer did not properly calculate pay for overtime or for rest and meal breaks for six years.

“We have agreed to the proposed settlement to resolve all of the plaintiffs’ claims and avoid the continuing distraction and expense, together with the risks, of protracted litigation,” Chief Executive Etienne Snollaerts said in a statement.

“This settlement gives back to the employees the money they earned,” said Larry Willis, lead counsel for the plaintiffs and a principal at Callahan McCune & Willis in Tustin.

In addition, Smart & Final, based in City of Commerce, said its board approved the repurchase of as much as $20 million in stock. The amount represents about 5% of its shares outstanding.

Smart & Final shares rose 2 cents to $13.42; the stock has fallen 19% in the last year.

“Smart & Final stock, at current market prices, is undervalued based on recent performance and our growth prospects,” Snollaerts said.

Second-quarter sales rose 5.7% to $484.1 million, the company said July 11. It reported net income in 2004 of $30.2 million on sales of $1.96 billion.

Smart & Final, founded in 1871 in Los Angeles, has stores in California, Oregon, Washington, Arizona, Nevada, Idaho and northern Mexico.